Sunday, October 4, 2009

Got Milk? Maybe not for long.

Florida’s Milk Industry Soured by Bad Economy

News Service of Florida - Oct 3rd, 2009

First there was the housing implosion. Then banks melted down.

Now, Florida’s milk industry is souring.

The state’s already shrinking dairy industry is getting pummeled by the recession, with a Senate report released Thursday showing each farmer will lose an average $709,000 this year.

“Milk prices have come way down but our costs remain very high,” said Joe Wright, who runs a 1,400-head dairy farm in Avon Park. “It’s a double whammy that’s really hurting the industry.”

There are 140 dairy farms in Florida, fewer than half the number that existed as recently as 1992. Milk sales account for 90 percent of the revenue collected at Florida dairy farms, but prices have plunged 50-cents-a-gallon over the past year, costing farms an expected $99 million this year, according to the study by the Senate Agriculture Committee.

The findings are scheduled to be reviewed by the committee next week. Wright, who also serves as a vice-president with Dairy Farmers Inc., in Orlando, said Floridians’ milk consumption has slowed with the recession – falling 5 percent some months last year.

Florida’s population, which declined last year for the first time in 60 years, also contributed to the state’s milk malaise. Consumption, however, has picked up again in recent months, spurred by a price-war among Florida retail stores, industry analysts say.

But feed costs remain high, rising sharply in part because of the federal ethanol program which now absorbs roughly one-third of the corn that otherwise would be available to go to cattle, according to the industry.

“Corn prices were three times their 10-year average last year,” Wright said. “They’ve since come down a bit. But you can’t stay in business with those kinds of increases.”

The Legislature is being asked to consider taking steps to bolster the industry in coming months – although no big bail-out is proposed.

Instead, possible moves range from the heavy-handed — a proposed requirement that government institutions in Florida buy a certain percentage of milk from the state’s dairy industry – to more traditional tax incentives and other proposals easing state environmental regulations for farms.

Another approach encourages the state to provide tax credits to encourage more development of bio-fuel from Florida dairy farms – what the industry calls anaerobic digestion technology.

Even taking modest steps in converting Florida cow manure and its accompanying methane gas to electricity could power as many as 2,000 homes in each Florida county, Senate analysts said.

The new report also points out that the state’s dairy industry is concentrated in the Lake Okeechobee area and Suwannee River basin in North Florida. Since those regions also are home to most of Florida’s prisons, those facilities could be pushed to convert waste management systems to those using bio-fuel from nearby dairies, the study suggested.

“If you can make bio-fuel economically worthwhile, farmers would give it a try,” Wright said.

Sen. Dave Aronberg, D-Greenacres, a member of the Senate Agriculture Committee whose district includes a belt of dairy farms near Lake Okeechobee, said he was uncertain what steps are needed for the industry’s survival. “But we can’t let agriculture go by the wayside, and dairy is a big part of it,” Aronberg said.

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